Leader of the Pack

Leader of the Pack

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One week he may be in Vegas. The next, California. But for the first time in a fast-paced 40-year career, Rich Caturano ’74, MST ’85 isn’t worried about the endpoint. A yearlong appointment as chairman of the American Institute of Certified Public Accountants (AICPA) finds him relishing the ride.

“Every year in a CPA firm, you set a budget, you set goals, and you’re focused on the destination,” says the alumnus, partner and national leader of culture, diversity and inclusion at McGladrey LLP. “The great thing about my year as chairman was being able to enjoy the journey: the experience of being chairman, the people I’ve met, the conversations I’ve had, the challenges we face.”

And the challenges are many. Caturano points to some 30 key industry-wide initiatives underway by the AICPA, including globalizing the CPA brand and simplifying the accounting standards at private companies.

“I’ve spent my life advising private middle-market companies, and for 35 years we’ve been looking at the growing complexity of accounting principles. At most companies, they’re getting to be way over people’s heads and a little bit unusable,” he says. “So one of my key goals was making sure we made some progress in the private company financial reporting area.”

Minding the Gaps

Of all the items on the AICPA chairman’s to-do list, increasing diversity and inclusion in the accounting industry has been a special focus for Caturano. Despite substantial jumps in numbers of female and ethnic minority CPAs since he joined the field in 1973, gaps remain.

“Minorities represent about 20 percent of our population at CPA firms,” he notes. “That’s a lot lower than the U.S. population of minorities at 37 percent.”

The issue hits close to home. Having grown up outside Boston in a family of Italian immigrants, Caturano remembers what it’s like to feel like an outsider at work.

“Predominantly, the old business world in Boston consisted of people who were different from me. They weren’t Italian immigrants, that’s for sure,” he says. “They had certain impressions of Italian immigrants, certain stereotypes. Over the years, I’ve had to overcome a lot of that.”

Overcame and then some. From his start as a staff accountant, Caturano has gone on to work at the highest levels of the profession. The private accounting and business services firm that he co-founded in 1978 grew to be the largest in New England and ranked among the top 40 nationwide. McGladrey acquired Caturano and Company in 2010.

A New Path

The AICPA role set Caturano’s own career on a new path. In July 2013, he took up duties as national leader of culture, diversity and inclusion at McGladrey.

“A lot of people think the way to achieve diversity is to go out and hire a lot of minorities,” he explains. “But unless you have an inclusive environment — where people feel part of the company’s culture and included in decision-making — minorities won’t want to work for you. And those who might be convinced to work for you won’t stay."

“The good news with respect to diversity is that our profession is one that judges people based on their performance,” he adds. “Companies want to be diverse, they just don’t know how to do it. So we need to get the how-to out there.”

Zen on Wheels

His work on diversity and other critical issues for the profession is not something Caturano expected to wrap up neatly during his term as AICPA chairman, which ended in late October.“It’s a long-term thing,” he says. “We’ve got to lay the groundwork and hope that we’re laying the right one, so that five years from now or 10 years from now, we’ll be able to see meaningful results.”

Such patience may seem at odds with Caturano’s goal-driven nature. But “enjoy the ride” has become something of a mantra for the 60-year-old. The philosophy turns literal when it comes to the Harley-Davidson Road King parked in his garage.

“Driving that motorcycle without getting hurt is a challenge for me,” Caturano says of rides around hometown Gloucester, Mass., and elsewhere that help focus and clear his mind.“My goal is to enjoy life with my kids and my wife, rather than to leave a lot behind. What I’m going to leave behind is my mark on the profession and a lot of happy memories for my family.”

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Scanning the Horizon

Diversity and inclusion is not the only area that Rich Caturano addressed during his tenure as AICPA chair. Here he highlights other challenges and trends unfolding in the accounting profession today.

Speed of Change

Back in the early ’70s, when Caturano entered the field, the pace of change in technology tools, accounting standards and tax laws was more tortoise than hare. “Today, business evolves much more rapidly,” he says. “A concept can pop up and all of sudden you’ve established a company in a month. And the technology changes are incredible.” From an accounting perspective, Caturano believes the key to keeping up with the breakneck speed of change is specialization. Approaches seem to vary depending on the size of the firm. “For small firms or small CPA practitioners, we’re seeing alliances formed with other CPAs who have expertise in different areas,” he explains. “While within many larger firms, we find people beginning to develop specialties and become more focused in what they do.”

Globalization and the CPA ‘Brand’

The past few decades have seen a shrinking business world, as companies operate not only across state lines but international borders. The situation poses a unique challenge for U.S. accounting firms, Caturano says, because the Certified Public Accountant is an inherently American brand. “The CPA brand is not the one that audits companies in the rest of the world. When you go to Europe, for example, it’s chartered accountants,” notes the alumnus. “It’s difficult to establish a global brand when you have restrictions on the use of that brand in other countries.” He cites efforts by some thought leaders in the profession to develop ways to engage a global type of membership, without deviating from the core purpose of certified public accountants in the United States. Big Four accounting firms already have global networks within their respective organizations, he points out, while many smaller firms have joined global alliances of CPA firms. Still, many of these smaller firms have something to prove. Says Caturano: “They’re going to need to demonstrate that they can provide global service to clients in a seamless way.”

Simplifying Standards

The hyper-complexity of accounting standards is a long-time flashpoint in the field. Caturano identifies a few key areas of focus in simplifying accounting practices — and acknowledges great progress in doing so across the board. One focus is simplifying GAAP (generally accepted accounting principles) which are designed primarily for larger public companies. The Financial Accounting Foundation, which governs the standards, has established a “private company council” that has been taking the most complicated items within GAAP and either modifying or eliminating them for private companies. Even a simplified version of GAAP will be too complicated for the smallest of the private companies, says Caturano. The alternative is something called the Financial Reporting Framework for Small and Medium Entities (FRFSME) developed by a task force that included CPA practitioners, preparers and users of financial statements, and AICPA staff. The framework is considered an “other comprehensive bases of accounting,” which small private companies can use in place of GAAP. With it, Caturano says, those who use the financial statement for small private companies will have “more relevant information for businesses of this size.”